Lawsuit Allegations: Yelp Hurts Small Businesses and Their Online Reputations

Recently, a U.S. District Court of Appeals in San Francisco dismissed a lawsuit against Yelp, the online business review site. Four small businesses brought suit against Yelp claiming that the company used advertising payments to extort small business owners in exchange for the favorable manipulation of online reviews about a business on Yelp’s website. The case was dismissed because the court felt that the alleged manipulation of review postings did not fulfill the stringent definition of extortion provided by federal law. In its decision, the panel stated that “any less stringent standard would transform a variety of legally acceptable business dealings into extortion.” This decision could have overarching effects on small business owners looking for relief for alleged injuries caused by online business review sites.

As of the date of this article, A People’s Choice has 137 legitimate reviews that have been posted on Yelp by former customers, 47 of which have been screened and are not showing on our Yelp profile page. Screening legitimate reviews is not only a slap-in-the-face to the business, but also the customer who has taken the time to express their personal experience with a company they have done business with.

Yelp and Small Businesses

Yelp is a San Francisco based tech company whose website allows users to post reviews of their experiences with a particular business and the services provided by that business. On the Yelp website the review posting is placed on a business’s separate Yelp page and is easily accessible for the world to see. Yelp says that it has 138 million viewers visit the website each month, and that since Yelp’s founding in 2004, over 61 million reviews have been posted. Most of Yelp’s revenue, which in 2013 totaled $233 million, comes from ad sales, which are charged to Yelp’s business clients at rates between $300 and $1,200 each month.

How Yelp Hurts Small Businesses – The Allegations in the Complaint

The suit filed by four California small business owners alleges that Yelp both extorted and attempted to extort advertising purchases from them through the placement of unfavorable reviews at a higher or lower place on the business’s Yelp page. The placement of positive or negative reviews could make these reviews some of the first things people see when visiting a business’s Yelp page. The businesses alleged that Yelp would move the unfavorable reviews to the top of Yelp pages when businesses did not agree to buy ad space on Yelp’s website.

Yelp has vehemently denied claims that it manipulates ratings and reviews on its website. This stance has been Yelp’s response in the face of allegations that business owners have presented for years who believed that Yelp has hurt small businesses by manipulating reviews and ratings to force business owners to buy ad space on the website in exchange for having a more positive reputation on the website. Another 2011 case alleging similar illegal conduct was also dismissed, but not because of the stringent extortion requirement not being met. Instead, in this case, it was found that the legal definition of extortion was not fulfilled by the plaintiffs because they did not have a preexisting right for their business’s Yelp page to be free of negative reviews and/or comments, and that Yelp had the legal right to charge for ad placements on the website.

The plaintiffs in the most recent case against Yelp have 10 days from the time of dismissal to decide whether to appeal the decision. If the decision makes it through the appeal process, it could end up in front of the U.S. Supreme Court next, thus having a lasting impact on Yelp’s business both in California, in Illinois and throughout the entire country. The non-attorney professionals at A People’s Choice are watching this case carefully, and are ready to help you draft any and all business law-related documents you may need.

A People’s Choice Offers Businesses Low-Cost Self-Help Legal Document Preparation

If your business requires legal documents and wants to avoid the high cost of attorney’s fees, contact A People’s Choice for low-cost legal document help. Although we cannot give legal advice, A People’s Choice can help you in preparing many routine business legal documents without having to hire a lawyer.